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Stewart Thompson: Central banks use gold to control markets

Section: Daily Dispatches

10:54p ET Tuesday, December 21, 2010

Dear Friend of GATA and Gold:

In commentary published today at GoldSeek, Stewart Thompson of the Graceland Updates letter emphasizes again that central banks buy and sell gold not to "make money" but rather to control the value of their currencies, moving their currencies up and down as politics seems to require -- that is, to rig currency markets.

This point was made four years ago by the British economist Peter Millar in his excellent study, ""The Relevance and Importance of Gold in the World Monetary System," which you can find at GATA's Internet site here:

Of course the same point has been made quite often lately by market analyst James G. Rickards of Omnis Inc., who has suggested that the Federal Reserve peg the dollar to a higher gold price through "open market" purchases and sales of gold, rather than through the traditional surrpetitious maneuvering of intermediaries:

Thompson writes today:

"With quantitative easing effectively dead now as a tool to handle any further worsening of the crisis, the central banks will look to accelerate their gold buy programs to revalue gold higher, and keep it higher. The point of revaluation is to devalue the debt that is owed by the government to its citizen creditors.

"There is no possible way on this earth that I am going to stand before you four days before Christmas as gold revaluation gets under way and top-call myself or you out of your gold items.

"The central bank buy programs are not about accumulating gold as an asset, as you accumulate it as an asset, an investment. They use gold as a control mechanism, and it takes very little gold to control the entire paper money system.

"The central banks have no interest in buying gold cheaply or selling it 'high.' During gold revaluation (now) they want to pay higher and higher prices for gold, to ease their ability to pay their creditors in paper money."

Compare the thoughtfulness of Thompson, Millar, and Rickards with the cavalier remarks of supposed analysts like Jon Nadler of Kitco, who insists that central banks have absolutely no interest in the price of gold, and Jeff Christian of CPM Group, who says he has consulted for most central banks and has found that they hardly ever think about gold at all even as they claim to sit on huge gold reserves.

Of course the Fed somehow thinks about gold enough to refuse to give GATA access to its records about gold and particularly the records of the Fed's gold swap agreements with foreign banks:

Thompson's commentary is headlined "Gold and Dow: Liquidity Flows For 2011" and you can find it at GoldSeek here:

CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.


Sona Drills 85.4g Gold/Ton Over 4 Metres at Elizabeth Gold Deposit, Extending the Mineralization of the Southwest Vein on the Property

Company Press Release, October 27, 2010

VANCOUVER, British Columbia -- Sona Resources Corp. reports on five drillling holes in the third round of assay results from the recently completed drill program at its 100 percent-owned Elizabeth Gold Deposit Property in the Lillooet Mining District of southern British Columbia. Highlights from the diamond drilling include:

-- Hole E10-66 intersected 17.4g gold/ton over 1.54 metres.

-- Hole E10-67 intersected 96.4g gold/ton over 2.5 metres, including one assay interval of 383g of gold/ton over 0.5 metres.

-- Hole E10-69 intersected 85.4g gold/ton over 4.03 metres, including one assay interval of 230g gold/ton over 1 metre.

Four drill holes, E10-66 to E10-69, targeted the southwestern end of the Southwest Vein, and three of the holes have expanded the mineralized zone in that direction. The Southwest Vein gold mineralization has now been intersected over a strike length of 325 metres, with the deepest hole drilled less than 200 metres from surface.

"The assay results from the Southwest Zone quartz vein continue to be extremely positive," says John P. Thompson, Sona's president and CEO. "We are expanding the Southwest Vein, and this high-grade gold mineralization remains wide open down dip and along strike to the southwest."

For the company's full press release, please visit:

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Prophecy Drills 71.17 Metres of 0.52% NiEq
(0.310 % Nickel 0.466 g/t PGMs +Au and 0.223% Copper)
from surface at Wellgreen Project in the Yukon

Prophecy Resource Corp. (TSX-V: PCY) reports that it has received additional assays results from its 100-percent-owned Wellgreen PGM Ni-Cu property in the Yukon, Canada. Diamond drill holes WS10-179 to WS10-182 were drilled during the summer of 2010 by Northern Platinum (which merged with Prophecy on September 23, 2010). WS10-183 was drilled by Prophecy in October 2010. Highlights from the newly received assays include 71.17 metres from surface of 0.52 percent NiEq (0.310 percent nickel, 0.466 g/t PGMs + Au, and 0.233 percent copper) and ended in mineralization. For more drill highlights, please visit: